Daytrading November 13 pre-market

Morning traders. Thanks Trees and after-market regulars. Interesting discussion last night.

Market wrap:

An accelerating slide in commodities and weakness on Wall Street point to a red open here as the Federal Reserve continues to prep the market for a US rate rise next month.

The December SPI200 futures contract slumped 69 points or 1.3% to 5063 as BHP marked a new seven-year low and gold and copper joined other metals at their weakest level in six years. The Bloomberg Commodity Index touched its lowest point since 1999 as crude oil neared its August nadir.

US stocks notched their sixth loss in seven sessions following public pronouncements from four Fed officials, including Chair Janet Yellen. The S&P 500 slid 29 points or 1.4% with the materials, energy and financials sectors leading the way. The decline picked up pace after the index broke below its 200-day moving average. The Dow shed 254 points or 1.44% and the Nasdaq 62 points or 1.22%.

While Fed Chair Yellen did not address the economy or the likely timing of the first rate rise in nine years, comments from other officials appeared to support a hike next month. New York Fed President William Dudley said it was now as dangerous to delay as it was to increase rates. Dudley had previously been seen as a 'dovish' on rates. St Louis Fed President James Bullard said it would be prudent to raise. Read more here.

All 10 S&P 500 industry groups declined, with energy the biggest drag. The US energy ETF fell 2.27% after crude reached a two-and-a-half-month low. West Texas Intermediate crude oil for December delivery settled $1.18 or 2.75% lower at US$41.75 a barrel, its lowest settlement since August 26, after US inventories rose than expected last week and OPEC predicted higher output next year. Read more here.

"I think we're down due to energy prices more than anything else," Peter Cardillo, chief market economist at First Standard Financial in the US, told CNBC. "That along with the fact the market is in a downward consolidation phase. What we're seeing is a market that is correcting and using some excuses — the oil price decline and some of the Fed comments as well."

The S&P 500 has been retracing for the last week and a half after peaking less than 1% short of a record last Tuesday. The retrace commenced when Janet Yellen used an appearance before a House committee to argue the case for raising rates next month.  The index is down more than 2% for this week and on course to break a six-week winning run. Consumer stocks came under selling pressure as investors mulled a weak profit report from retailer Macy's.

The Bloomberg Commodity Index fell for a seventh night, extending its longest losing streak in three months. Copper hit a six-year low on the London Metal Exchange, its fifth loss in six sessions. Zinc and lead hit multi-year lows earlier this week. London copper lost 2.4%, aluminium 1.7%, lead 0.2%, nickel 2.7%, tin 1.4% and zinc 0.6%. Read more here. US copper for December delivery was recently down 2.2% at US$2.17 a pound.

BHP's losing run in the US extended to a seventh session after Brazil's President vowed to hold the company to account for a dam burst at its jointly-owned Samarco mine. Read more here. BHP declined 2.56% and Rio Tinto 2.75%. Spot iron ore for import to China yesterday edged up 10 cents to US$47.80 a dry ton.

Gold recorded its weakest close in more than five years as the prospect of a strengthening US dollar continued to dull demand for alternative stores of wealth. Gold for December delivery settled $3.80 or 0.4% lower at US$1,081 an ounce, the metal’s lowest finish since early 2010. The NYSE Arca Gold Bugs index lost 1.76%.
  
European stocks suffered their biggest setback in six weeks as a profit warning from Rolls Royce compounded selling of resource stocks. The Stoxx Europe 600 lost 1.62%, Germany's DAX 1.15%, France's CAC 1.94% and Britain's FTSE 1.88%.

The dollar was this morning buying 71.28 US cents.

TRADING THEMES TODAY

THREE IN A ROW: The air has been seeping steadily out of the October rebound since it peaked on the 26th. We're now set for a third straight losing week and very possibly a retest of the September two-year low next week if the commodities rout continues. The weakness at the top end of the market has had little impact on the speculative end, which is in one of its deliciously frothy phases. However, the disconnect is so apparent that something is likely to give, perhaps as early as next week if - and it's a big 'if' - we move back into the 'fear' stage of the market cycle. Meantime, let's enjoy. The ASX has front-run this global retrace, which may have a lot further to run overseas. On the other hand, we should be among the first markets to bounce when the reversal comes.

ECONOMIC NEWS: No significant domestic news scheduled today. Plenty of meaty economic data in the US tonight, including October retail sales/core retail sales, producer price index/core PPI, preliminary consumer sentiment and inflation expectations, and business inventories.

Good luck to all.